Making its debut on 09/25/2012, smart beta exchange traded fund FlexShares Morningstar Emerging Markets Factor Tilt ETF (TLTE) provides investors broad exposure to the Broad Emerging Market ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Flexshares. TLTE has been able to amass assets over $360.5 million, making it one of the average sized ETFs in the Broad Emerging Market ETFs. This particular fund seeks to match the performance of the Morningstar Emerging Markets Factor Tilt Index before fees and expenses.
The Morningstar Emerging Markets Factor Tilt Index reflects the performance of a selection of equity securities designed to provide broad exposure to the global emerging equities markets, with increased exposure to small-capitalization stocks and value stocks.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.57% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.06%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Taiwan Semiconductor Manufacturing Co Ltd Common accounts for about 5.71% of total assets, followed by Samsung Electronics Co Ltd Common Stock Krw 100 and Sk Hynix Inc Common Stock Krw 5000.
TLTE's top 10 holdings account for about 19.44% of its total assets under management.
Performance and Risk
So far this year, TLTE return is roughly 22.86%, and it's up approximately 44.99% in the last one year (as of 06/01/2026). During this past 52-week period, the fund has traded between $55.58 and $78.84.
The fund has a beta of 0.66 and standard deviation of 16.11% for the trailing three-year period, which makes TLTE a medium risk choice in this particular space. With about 3100 holdings, it effectively diversifies company-specific risk .
Alternatives
FlexShares Morningstar Emerging Markets Factor Tilt ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Emerging Markets Stock Index Fund ETF Shares (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index. Vanguard Emerging Markets Stock Index Fund ETF Shares has $122.13 billion in assets, iShares Core MSCI Emerging Markets ETF has $162.19 billion. VWO has an expense ratio of 0.06% and IEMG changes 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs
Bottom Line
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FlexShares Morningstar Emerging Markets Factor Tilt ETF (TLTE): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).